It is becoming a bit of a tradition for notebook manufacturers to talk about how much the notebook computer is going to usurp the desktop.
It's one of those statements that if you say it often enough, it will eventually become true.
There is no shortage of players in the notebook market that are willing to glamorise the products and emphasise the benefits to the dealers. TFT screens and the trend towards offering internal four-speed CD drives as standard have gone some way to help the notebook cause, while falling prices no doubt cement the belief that notebooks will one day be on a par with the desktop. The manufacturer bun-fights kick up a number of arguments which suggest that the notebook is coming of age and ready to compete on the big stage, but as yet the market has not responded. It seems that no matter what the notebook market does, the desktop is still king.
This has done little to quell the appetite that many manufacturers have for the notebook market. It is seen as having massive potential, but the market hasn't quite realised that yet.
STEAL A DEAL
For many manufacturers, it is difficult to escape the fact that Toshiba is so dominant. It leaves the rest of the manufacturers fighting for the scraps of any new market opportunities that emerge. But Toshiba's dominance may be irrelevant because the market is due for some big changes, and many manufacturers believe that any change gives them a hope of stealing market share.
The latest craze has been for multimedia notebooks, while the slowly falling price of TFT screens has meant that colour notebooks can start to compete with desktop PCs. It all means a flurry of activity in the market as manufacturers try to create demands for the new technologies with new launches.
To compete with the desktop, notebooks would naturally have to have all the benefits for a relatively similar price. 'The notebook has become an office in a box and no worse than a desktop,' says Samsung product marketing manager Charles Bows. Although manufacturers charge more for squeezing all the components and peripherals into a small case, the price differential should not be so vast.
It is a problem that has dogged the notebook market in the past and a big reason why notebooks are almost entirely business rather than home machines. For this reason, most notebooks are sold to middle and senior management business users, says Martin Clark, marketing director of portable specialist Lapland.
'There is a hole in the low end of the market,' he says. 'There is a dearth of low-end quality notebooks, although I know Toshiba is planning something.'
It's an area which Samsung believes it can penetrate as it plans to launch a consumer oriented product as part of its 1996 push into the market.
Details of the product have yet to be released, but it is due for an August/September launch. In spite of this intended flirtation with consumers, Samsung holds fast to the idea that unless you have got a high-end and mid-range product, you are not worth your salt in notebooks.
As a notebook brand, Samsung is a relative newcomer and recognises that it has to pinpoint certain markets with certain technologies to gain any share of the spoils. 'We are increasingly seeing the notebook as a strategic product,' says Bows. 'There is nothing the notebook cannot do that the desktop can. We believe that having vertical integration in manufacturing, where we can make 95 per cent of all components of the notebook, including the TFT screen, gives us a considerable advantage.'
The ability to make TFT screens is undoubtedly a bonus. 'TFT screens are consistently renowned for being in short supply,' says Clark. 'The 10.4in is the de facto standard for TFT screens at the moment, but just six months ago this was hard to get hold of.' Clark deals mainly with notebooks demanding everything from 11.8in to 12.4in TFT screens.
Shortage is a word to which he has become accustomed, but he says that things can change fast when a product becomes more volume-oriented. At the moment, a 13.5in screen can be fitted into a standard A4 notebook, leaving manufacturers' R&D divisions another inch to play with, so there is still an immediate future in the high-end TFT market.
The advancement of TFT technology has meant that mono notebooks are being consigned to the stock clearance shelves. Samsung is launching a 90MHz Pentium TFT notebook with an 810Mb hard disk for under u2,000. Six months ago this would have been nearer u3,000, which perhaps shows TFT technology has become more cost-effective to produce.
Clark suggests that TFT manufacturers are still offsetting costs from building screens two years ago, but as the yields get better, so the prices will fall. This will no doubt please potential buyers of multimedia notebooks who need a mobile computer for business and a multimedia desktop, but cannot afford both.
It is a situation that threatens to undermine the long-term desktop market. This would please a manufacturer such as Toshiba no end. With such a dominant share, Toshiba would become the biggest hardware player in the PC industry.
This does seem a long way off and with IBM and Compaq already heavily involved, things could change quickly over the next few years. Compaq, according to portables product manager Pauline King, has plans to eat into some of Toshiba's market share. It is putting a lot of effort into the highly mobile sector, which King defines as comprising experienced users who have already owned two to three notebooks and are looking for a highly mobile unit to cope with extensive use on the move.
The product is due out in the summer and is expected to be lighter, thinner and of a different design and innovation to Compaq's LT5000 product. King would not disclose any further details.
Compaq believes it has found a niche in which it can develop. 'We are selling lots of LT5000s into the highly mobile sector,' says King, 'mainly because we have good availability and it's a big hit in terms of form factor and modularity.'
She admits that Compaq's approach to notebook product transition has been conservative, making sure it can deliver the product after it has launched. It is a sound policy. If product is available and its nearest rivals, Toshiba and IBM, are suffering from supply shortages, no one will ever get fired for buying Compaq.
Texas Instruments has added to its notebook range in an attempt to justify its position as one of the world's fastest-growing mobile computer vendors.
Its Travelmate 5300 shows how notebook manufacturers are looking to exploit areas such as full motion video and the Internet. Featuring a 1.2Gb hard disk, 2Mb of video Ram, 256Kb of level two cache, 16-bit sound card and internal speaker and microphone, the Travelmate 5300 has been set up as an example of how the notebook can encompass the features that a year ago could only have been had on a desktop.
Despite the fact that notebooks can incorporate just about anything that a desktop PC can, industry in general is still reluctant to invest in them. According to Clark, 'notebooks are still not genuinely sold to the average travelling sales person', therefore dismissing the idea that this is the main market for notebooks. 'Travelling salespersons in the IT industry are using it, but this has failed to carry over into other industries,' says Clark. 'The pharmaceutical industry has accepted it, probably because of the need for vast amounts of data about drugs. The insurance industry has also accepted it, mainly because insurance agents are required by law to print out insurance quotes on site.'
Clark also sees new markets emerging. The advent of the digital video disk (DVD), which is due to be launched at the end of the year, should trigger some changes in the market. Panasonic is preparing to launch a precursor product to DVD which has a rewritable optical drive. According to Clark, most manufacturers are thinking along the same lines and will be rushing towards releasing DVD products as soon as it becomes available.
COMFORT AND DESPAIR
Perhaps industry in general is waiting to see the impact of DVD before it decides whether to plump for notebook computing. Cramming advanced technology into a small box is usually a dangerous game, as history has proved. It could be that the notebook makers are fighting against a size factor, whereby buyers feel more comfortable with a large desktop PC.
And there is an attitude that the notebook is something of a gadget - a problem that has to be overcome.
More companies are taking the notebook market seriously. As well as the intended push into notebook products by Samsung and Compaq this year, other manufacturers have organised themselves to make a concerted effort.
NEC has undergone an extensive reorganisation in Japan, including the setting up of a dedicated notebook division. This reorganisation has meant that more marketing funds are available for its UK subsidiary. Rodney Davies, head of NEC's UK PC division, has admitted that NEC is still ranked in 'others' when it comes to notebook market share, but has remained attractive to dealers by offering a margin a couple of points higher than its competitors.
Packard Bell is also serious about the notebook market following its acquisition of Zenith, a brand which it is expected to keep so that it can target corporate customers.
In many ways, the notebook is living as a leading edge technology. As well as the size factor, it's becoming increasingly obvious that notebook makers are looking at the 100MHz Pentium as being the entry level. 'The 486 is dead,' says Clark - although many would argue that the same could be said for the desktop. Demands on both desktop and notebook are such that anything less than a Pentium cannot cope.
One important thing to consider with notebooks is that there is always a trade-off with mobility. For a start, power is limited and unless the user is prepared to tow a battery the size of a caravan, the notebook can never be used constantly on long journeys. But for most users this is not an issue: battery life is such that it can cope with usage between offices and the inevitable recharge. Another trade-off is that larger screens will drink more power while more peripherals will eat into usage time. Until battery makers can overcome these problems, the notebook will remain at a disadvantage to the desktop.
It would be much safer for anyone selling notebooks to not look on the desktop as such a major rival - a view that is supported by King. She suggests each has its advantages, and that what it really comes down to is who is using it and what they are using it for.
At the moment, the type of user does not seem broad enough to justify the massive investment that the manufacturers are starting to put into the market. Although Toshiba has the lion's share of the market, the market itself is relatively small. But it has the potential to double its size in the next few years. Then it will be a case of whoever reacts fastest: history has already shown in the PC market that quick reactions can topple any long-term giant - ask IBM.
SALES TAKE A SWITCHBACK RIDE
Toshiba's status as the god of notebooks seems unshakeable. Just when you think a new notebook sect has been formed, Toshiba lashes out a thunderbolt and sends its rivals scurrying for cover. According to Romtec, Toshiba now holds 49 per cent of the UK indirect market by volume. It's a massive share and one that perhaps surpasses all previous records. Despite product shortages, Toshiba managed a surge in sales, largely at the expense of IBM's Thinkpad.
As a consequence, IBM's market share has fallen four per cent to 12 per cent. Product shortages have also dogged IBM's fortunes, which were more severe than Toshiba's. Romtec analyst Chris Herbert says IBM notebook sales have fallen in real terms by 16 per cent between January and March.
Context also shows signs of IBM retreating, although it records a 63 per cent increase in sales for January 1996. February, however, saw a 45 per cent drop, giving it an 8.7 per cent share of notebooks sold that month. IBM's total sales between March 1995 and February 1996 are recorded at 32,242. In comparison, Toshiba's sales for the same period are recorded at 114,527. Except for minor glitches, in April, June and July last year, Toshiba has consistently shown an increase in sales.
Context gives Toshiba a 43 per cent share of the market, compared with IBM's 12 per cent. Piggy in the middle is Compaq. It has an 18 per cent share on unit sales of 49,047. Compaq has had an up-and-down period with February its best month yet in terms of sales increase, registering 117 per cent. Both Romtec and Context show a fairly big gulf between the top three and the rest. Fourth-placed Apple is given a seven per cent share for the period on sales of 18,615. Not since September and October last year has Apple registered any considerable growth. The only other noticeable shift in pattern has been with Digital. In January it registered a 962 per cent increase in sales, jumping from 271 units in December to 2,879 units in January. A 12 per cent share is given to the manufacturers that make up the 'others' category, with sales totalling 31,267.
As a whole, the UK market is showing small signs of growth, although much of the deviation in figures could be seasonal. In March 1995, 25,963 units were sold compared with 25,396 in February 1996. In between these two dates, sales wobble slightly to an April low of 17,179. Perhaps more importantly, the total figure in terms of revenue for the period is 592,780.
Corporate resellers accounted for 31,076 units for the period, while dealers accounted for 237,999 units. This in itself is a sign that the notebook has not infiltrated vertical markets in volume, but is more concentrated on general business users.
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